Word: tarp
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Dates: during 2000-2009
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...selling us trick mortgages and flimsy securities based on those mortgages to paying themselves astronomically while enjoying perks like private jets - the Obama Administration has proposed a $500,000 pay limit for the top honchos of any company that accepts money from the government's Troubled Asset Relief Program (TARP). Said President Barack Obama: "We all need to take responsibility. And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves their customary lavish bonuses." (See the worst business deals...
...maximum-wage plan is not retroactive, applying only to companies that tap TARP in the future. The restrictions will apply until a bank pays off its TARP tab and starts behaving. According to an Administration source, "If a bank has restored viability, has paid back the United States government with interest, and is now a completely private-sector bank ... then we can return to a time when this is between them and their shareholders...
...effort to carve some of the excess behavior out of the system, companies that take TARP will be required to create an internal panel on "luxury" purchases, the definition of luxury - a jet, fancy office or glitzy sales conference? - being left vague under the "you know it when you see it" rule. It also allows employees to "name and shame" abusers. There's a dose of shareholder democracy too. Companies will have to subject their compensation packages to a nonbinding shareholder vote, popularly known as "say on pay." (See the top 10 scandals...
That's for future users of TARP. Banks that have already taken TARP money - including some well-run banks that did so at the "urging" of the government so there wouldn't be a stigma attached to the crippled banks that needed the money - won't have to give anything back to fly under the federal paydar. "We need to be tough and strict but sensible," President Obama said. "We do not want to deny companies the ability to attract the talent pool they need." That's not good enough for some Senators, like Missouri's Claire McCaskill, who want...
...President Obama recognized the real risk here: some very good bankers might not want to work for maximum-wage pay and could bolt their TARP-constrained companies. Why, for instance, would JPMorgan Chase CEO Jamie Dimon, perhaps the most astute operator in banking, want to labor for a measly 500 large to run a company with $2.2 trillion in assets...